Consolidation or Capitulation?

posted Nov 17, 2014, 11:55 AM by Katie Shook

Last week we saw a whopping 8 points of movement on the SPX.  Despite the meager showing, the momentum of this market does not appear dead.  Last week was more likely a consolidation pattern setting up the next leg higher.   (Don’t fight the Fed gang).

Over the weekend the futures market opened down.  This is likely a response to the fact that Japanese economic data — well, let’s not mince words — it pretty much sucked.  It’s an official triple-dip recession now.  Despite the massive central bank manipulation they’re still not getting traction.

Of course, you can’t keep a good market down.  And this week, there’s definitely more economic data to keep things interesting – the biggest of which will be released on Wednesday:  FOMC minutes.  But don’t count out industrial production, CPI, and housing data — all of which are littered throughout the week.  In fact, as I write this, the market is prepping for the Industrial Production numbers.  The futures are already well off their weekend lows.  And, despite the craziness of the global market, there appears to be little on the tracks ahead that would derail this train.

The key number this week on the upside should be around 2068.  That’s the next technical ‘window’ the SPX is likely to test (depending on how you draw up your charts – this is a Fibonacci level based on the 21-dmalg).  On the downside, keep an eye on about 2020.  I breach of either of these pricing levels should be met with decent follow-through in the next day or two.

Other than that, it doesn't appear the global picture has offered up anything of material note that should change trend right now.  We’ll be sure to keep you posted if we learn anything though.  The database is still fairly anemic at only 34% long.  Still, it’s a 1% or so improvement over last week.  The major index signals are unchanged.  Maintain course and speed captain…

ScreenHunter_05 Nov. 17 05.52

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